With reference to taxation in India, consider the following statements:
1. An ordinary resident is taxed on world-wide income
2. An NRI is taxed only on income received in India
Which among the above is / are correct?

[A] Only 1

[B] Only 2

[C] Both 1 & 2

[D] Neither 1 nor 2

Answer: [C] Both 1 & 2

Taxation varies as follows:

Ordinary resident: To be taxed on world-wide income

Not-ordinary resident: To be taxed on income sourced from India or received/deemed to be received in India, or from income derived from a business controlled or set up in India

Non-resident: To be taxed only on income sourced from India or received/ deemed to be received in India.